If this is your first time buying a home then I’m sure you’re a bit overwhelmed. You may ask yourself a lot of questions like “do I need Septic tank services ?” and for some the amount of information is too much so they end up not buying a home. The fact is that it doesn’t need to be difficult and overwhelming and the key to making sure it’s not is being informed and prepared. Here is a starting guide to helping you get ready to buy your first home and hopefully these tips will make the process a bit better and more doable.
I’ve said a thousands times before and I’ll keep saying it; being prepared is so important when you’re a First Time Home Buyer. Going into the mortgage process unprepared is a recipe for disaster. Everything and anything will probably go wrong. Furthermore it’s a lot more time consuming to go into the application process unprepared then if you take the time to get prepared before you start. You’re never going to learn everything but if you can nail down the important parts you’ll save tons of time and tons of money.
Important Parts of Being Prepared
I’m going to keep it simple to ensure you can implement these suggestions without much effort to optimize your loan program search. First Time Home Buyers (FTHB) that follow these steps will be in a much better position to lock in a low interest rate compared to the FTHB who just goes in and wings it.
- Gather your documentation; specifically, your income documentation. If you are employee, then your two most recent paystubs and your last two W2 statements. If you are self-employed then put together your two most recent tax returns (all pages).
- Obtain a free credit report with credit score. Before getting into this please remember this one important fact; the credit score you see will not be the exact credit score a lender sees. They will be different. So what’s the point then? Simple; getting a report means you can accurately describe your credit history, accounts and balances and also give a general idea of what your score is. This is so important to the home purchase process.
- Ignore companies that are selling just to get your business because when you go to close your terms very well could be different. Work with well established and well respected mortgage companies that have a verifiable track record.
- Being a First Time Home Buyer you’ll want to ask questions and make sure you do. The biggest mistake a First Time Home Buyer can make is not asking enough questions.
Doing those four things will really help you get a handle on the mortgage application process and put you light years ahead of those that go into it not prepared. When a First Time Home Buyer is not prepared the Loan Officer can tell and in some cases may end up trying to charge more fees and/or a higher rate.
Educating yourself as to what specific mortgage items are will also really help. Learn what a Loan Estimate is, what it means to “lock in” an interest rate, the difference between a fixed rate mortgage and an adjustable rate mortgage. A few other things to know include; understanding the importance of the Closing Disclosure, the time frame it takes to close your mortgage and what are the total fees of the mortgage. Lastly; the difference between Loan Origination Fees and Discount Points.
If you’re working with a good Loan Officer they will be more than happy to answer your questions but it’s important to start off with some basic knowledge of how the mortgage process works.